I am currently using an external HD as scratch disk for my machine. I do notice a speed difference, like opening of large files 400mb and above and saving.
However there are time when the scratch disk will go on and on writing that will takes 2mins before your can do anything. That is when i access almost 10gb used for scratch disk. Not sure if it just affect me.
All in all it does not make my machine fly but most certainly it is slightly faster.
Firewire and USB external HDD transfer speeds are around 4 mb/s. Harddisk transfers (IDE) are around 20-40 mb/s, again depending on how busy the machine is. Stripe-RAID IDE HDDs hit sustained transfer rates of about 60mb/s. These figures are timed on my own PC.
i don't think using external HDD is a good idea unless you really have no choice. SATA might be even faster, but i don't have them.
I use fw400. That is certainly the reason why a desk top is by far still faster than laptop which i am using. I heard the speed of usb2 is not as consistant as FW. Maybe FW800 would be slightly better than.